States show how Congress can fix a broken budget process

President Joe Biden’s long-delayed budget has finally kicked off the congressional budget and appropriations process. Unfortunately, that process is broken.

The House has already abandoned regular order so spending bills can advance.

Yet spending bills are unlikely to be enacted by the start of the new fiscal year. Only four times since creation of the current budget process in 1974 have all the appropriations bills been enacted on time.

In addition, any “reconciliation” of direct spending and revenue will surely be partisan and deficit-increasing, the opposite of how it’s supposed to work.

Unfortunately, no matter which party has controlled the House, the Senate, and the White House, Congress struggles to budget coherently. The disjointed budget process is a major reason why.

Congress considers annual appropriations each year, but they cover only discretionary spending — core government activities such as defense, the courts, Congress, diplomacy, and transportation.

Yet discretionary spending accounts for less than one-third of the federal pie, and a shrinking slice at that.

The other 70 percent — direct or mandatory spending — is not considered with any regularity. Nor is revenue, the other major part of the budget.

No member of Congress holistically affirms overall spending and revenue priorities. Trade-offs are implicit at best. Opportunity costs of policy choices are obscured. It’s difficult to move resources to higher-valued uses, to engage in effective management, or to be a policy entrepreneur.

As the congressional budget process has degraded and members’ frustrations have grown, appetite for reform has increased. Fundamental changes are needed.

Fortunately, the states show alternatives that work. About half of members of Congress are former state legislators, governors, or otherwise have experience with state-level budgeting.

In each state, the governor proposes a budget to the state legislature, much as the president does to Congress. In many states (though certainly not all), the budget is a single, integrated document that includes nearly all spending and revenue. Tradeoffs and outcomes are clear. Policymakers can actively manage priorities across the full spectrum of fiscal policies.

And it works.

State legislatures and governors complete this work every budget cycle, whether annual or biennial. State fiscal targets and bond market oversight help, but more coherent processes help produce better outcomes.

In Congress, a unified budget could work within the existing committee structure, and the Budget Committees could still start the process.

The key change would be in the Appropriations Committees. Instead of reporting the 12 subcommittee bills separately, the full committee would combine them. This combined legislation would also include mandatory spending and revenue levels, along with any non-appropriations policy changes needed for the numbers to add up. Authorizing committees would be responsible for detailing their views and providing estimates on any such changes.

Instead of a disjointed approach with a ruined reconciliation process, Congress would have a single, unified budget that covers all fiscal policy areas. Congress could gradually and regularly revise priorities instead of ignoring festering challenges until they become crises.

To put it another way, the appropriations “pudding” can help Congress eat the active management “peas.” Many members of Congress get by on pudding and avoid peas, leading to budget bloat and congressional lethargy, while those who prefer peas are perennially peeved. Placing peas and pudding in the same meal broadens the possibilities for building a coalition for budgets.

Of course, the budget should also be an inclusive, deliberative process with opportunities to review and attempt to amend the legislation. A unified budget can let all committees shape the bill that comes to the floor, and then members could build ad hoc coalitions to propose floor amendments to discover the majority’s preferences.

Such a comprehensive budget might be on the floor a while, but it could take less time overall than today’s approach and be far more productive.

Congress can learn a lot from best practices in state legislatures, including how to budget successfully. Congress should consider all fiscal policies coherently, and a unified budget inspired by the states is an excellent place to start.

Kurt Couchman is a senior fellow for fiscal policy at Americans for Prosperity.